Firms Agglomeration and Unions
Pierre M. Picard
Centre de Recherche en Économie Appliquée (CREA); Universite du Luxembourg
Institute for the Study of Labor (IZA); Facultés Universitaires Notre-Dame de la Paix (FUNDP) - Faculty of Economics, Management and Social Sciences
CEPR Discussion Paper No. 3323
This Paper develops a model in which the interaction between product market imperfections, transportation costs, unions and workers immobility across regions creates a tendency for agglomeration of firms when transportation costs are low. The model fits quite well the European experience. It is able to explain the emergence of a centre-periphery pattern with equally populated regions. In the centre, most people work in the unionized industry and earn large wages. In contrast, workers in the periphery are employed at a low wage in a constant return to scale industry.
Number of Pages in PDF File: 29
Keywords: Agglomeration, monopolistic competition, unions
JEL Classification: F12, F15, J51, R12working papers series
Date posted: May 21, 2002
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